I0361064074

International Journal of Business and Management Invention
ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X
www.ijbmi.org || Volume 3 || Issue 6 || June. 2014 || PP. 64-74
www.ijbmi.org 64 | Page
Effect of Competence and Auditor Independence on Audit
Quality with Audit Time Budget and Professional Commitment
as a Moderation Variable
Abdul Halim1
, Sutrisno T2
, Rosidi2
, M. Achsin2
1
Gajayana University Malang, Indonesia
2
Brawijaya University Malang, Indonesia
ABSTRACT: High audit quality shows that auditors can detect financial statements containing misstatements
material, and they can reduce the asymmetry information between principal and agent, and they can guarantee
the stakeholder’s interests. Regarding to this opinion, this study has three aims. First was to test effect of
auditors’ competence and independence on audit quality. Second was to test whether audit time budget could
moderate effect of auditors’ competence and independence on audit quality. Third was to test whether the
professional commitment moderate effect of auditor’s competence and independence on audit quality. Analysis
units of this study were 918 public accountants in Indonesia in 2012. Data were collected by sending
questionnaires. Samples of 278 were selected randomly. However, collected data were 178 ones. Analytical
technique used was Partial Least Square (PLS). Test results proved that first, auditor’s competence and
independence positively affect on audit quality. It means the higher auditor’s competence and independence, the
higher audit quality. Second, audit time budget weaken effect of auditor’s competence and independence on
audit quality. It means the smaller audit time budget, the greater effect of auditor’s competence and
independence on audit quality. Third, professional commitment strengthens effect of auditor’s competence and
independence on audit quality. It means the stronger professional commitment, the higher effect of auditor's
competence and independence on audit quality.
KEYWORDS: audit quality, auditor’s competence, auditor’s independence, audit time budget, professional
commitment.
I. INTRODUCTION
Reliability and accuracy of financial information presentation and disclosure are important to get
investors confidence at capital market. Investor confidence to financial statements issuer can be increased when
audited by competent and independent public accountants. Public accountants always maintain audit quality
based on Public Accountants Professional Standards and Code of Professional Ethics of Certified Public
Accountants for survival of its clients, investors of audited company, and Public Accounting Firm itself.
However, in reality it is not happened.
Some example in Indonesia that coming to surface related to "cooking" financial statements issues are
PT Kimia Farma and PT Bank Lippo. PT Kimia Farma reported a profit of Rp 132 billion. In fact, it make a
profit of Rp 99 billion. Meanwhile, PT Bank Lippo publicly reported Rp 98 billion profit. However, in few next
months the financial statements submitted to Jakarta Stock Exchange stated that company loss Rp 1.3 trillion
(Gumanti, 2003). This action makes hundreds of audited financial statements quality become "questionable"
(Soeratin, 2010).
These issues are a symptom of problem that generated from low quality by public accountants. It
potentially creates uncertainty in quality and reliability of information presented in audited financial statements.
Therefore, it is considered important to conduct this study to explore variables affecting audit quality.
Associated with audit quality, DeAngelo (1981) proved that audit quality is determined by two factors, namely
auditor competence in finding a client breach in accounting system and auditor independence to report findings.
Audit quality of DeAngelo (1981) has been re-examined by several researchers, among them Schroeder et al.
(1986), Deis and Giroux (1992), Carcello et al. (1992), Sutton (1993), Behn et al. (1997), Moizer (1998),
Warming and Jensen (2001), Duff (2004), Jaffar et al. (2005), Baotham and Ussahawanitchakit (2009), and
Alexander et al. (2010).
These researchers’ results show a significance conflict. Therefore, audit time budget and professional
commitment is included as moderation variable the effect of competence and independence of auditors on audit
quality. Including audit time budget and professional commitment as a moderation variable is to known whether

Effect of Competence and Auditor Independence on Audit Quality with…
audit time budgets and professional commitment can strengthen or weaken effect of competence and
independence of auditors on audit quality?
Audit time budget in this study is included as a moderation variable the effect of competence and
independence of auditors on audit quality based on emotion theory of James (1950) and Lange (1922) in King
(2007), which states that emotions are result of a person's perception in response to various stimuli from outside.
Meanwhile, professional commitment in this study is included as a moderation variable the effect of competence
and independence of auditors on audit quality based on attitude theory of Allport (1935) in Anwar (1995:5),
which states that attitude is potential predisposition to respond in a certain way when individuals are faced a
stimulus that requires a response (either positive or negative). Furthermore, it is explained that gesture contains
three components: cognitive, affective, and conative.
Based on above description, this study aims are: (a) examining and explaining effect of auditors
competence on audit quality ; (b) examining and explaining effect of auditor independence on audit quality ; (c)
examining and explaining whether audit time budget moderate the effect of auditors competence on audit
quality ; (d) examining and explaining whether audit time budget moderate effect of auditor independence on
audit quality ; (e) examining and explaining whether professional commitment moderate effect of auditors
competence on audit quality ; (f) examining and explaining whether professional commitment moderate effect
of auditor independence on audit quality ;
Theoretical contribution of this study are : first, giving a better understanding on audit quality from
DeAngelo (1981) to include a time budget and audit professional commitment as a moderation variable the
effect auditor competence and independence on audit quality. Second, developing a theoretical framework to
treat audit quality as a construct of several variables, namely competence, independence, audit time budget, and
professional commitment that better defined through empirical indicators. Practical contribution of this research
is to provide guidance for CPAs or Public Accounting Firm to improve audit quality by considering determinant
variables, namely: auditor’s competence, auditor’s independence, audit time budget, and professional
commitment with their indicators.
II. THEORY REVIEW, CONCEPTUAL FRAMEWORK AND HYPOTHESIS
DEVELOPMENT
2.1 Theory Review
2.1.1 Quality Audit
DeAngelo (1981) said that audit quality is probability combination of competent auditors to found
violations in client's accounting system and to report their findings independently. Audit quality is measured by
two formative indicators, namely : (a) auditor's reputation where MacMillan et al. (2004) showed that reputation
is public perceptions about auditor past performance regarding to audit quality and standards of professional
conduct that are consistent in auditing process and (b) industry specialist auditors where Mayhew and Wilkins
(2003) stated that auditors are that often assigned to specific industries become very adept to identify and
addressing the problems of specific industry audit, resulting in a high quality audit.
2.1.2 Competence
Lasmahadi (2002) stated that competence is personal attributes of a person which enables to achieve
superior performance. Auditor competence was measured with four formative indicators, namely : (a) planning,
where Dikolli (2004) stated that existence of a good audit planning makes auditor will potentially have
competence to find material misstatements and in audit planning should consider client 's internal control
system, audit risk, and substantive testing procedures ; (b) knowledge, where Tan and Libby (1997) stated that
knowledge is one determinants of technical competence and very useful in auditors tasks structured; (c)
experience, where Colbert (1989) stated that an experienced auditor will makes judgment with a lower error rate
than inexperienced auditors so effecting competence ; and (d) supervision, where Malone and Roberts (1996)
stated that strong supervision will prevent auditor possibility to act that reduce audit quality and supervised audit
processes tends to produce a correct disclosure and higher audit quality.
2.1.3 Independence
Sridharan et al. (2002) stated that auditor's independence is a not bias mental attitude to make decision
in all audit and reporting. Auditor independence was measured with four formative indicators, namely : (a) audit
market competition, where Beattie et al. (1999) said that audit market competition is reflected by high
competitive prices that affect to reduce number of qualified personnel resources, so the risk to decline
competence and independence of auditor ; (b) economic dependence, where Deis and Giroux (1992) stated that
under high economic conditions the dependence can be used by client to oppress auditor by auditors change.
This can make auditor will not be able to avoid client pressures, thus causing them to weaken independence ; (c)
non-audit services, where Ashbaugh (2004) stated that high presence of non-audit services will create high

economic bond between auditor and client, so it can cause a loss of auditor independence ; and (d) auditor
assignment period where Dye (1991) stated that existence of long-term assignment potentially can undermine
auditor independence, because it can foster closeness between management and auditors.
2.1.4 Audit Time Budget
DeZoort (1998) stated that audit time budget is firm budget time because of limited resources allocated
to implement auditing. Audit time budget is measured with two reflective indicators, namely (a) time budget,
where DeZoort (1998) relate budget time budget to control the amount of time for an overall audit work; and (b)
time limit, where DeZoort (1998) relate time limit to budget deadline to complete any audit work at date/time
specified.
2.1.5 Professional Commitment
Aranya and Ferris (1984) stated that professional commitment is a person's love and courage to carry
duties is charged based on rules and norms within profession. Professional commitment is measured by three
reflective indicators of Hall et al. (2005), namely : (a) normative professional commitments regarding to
auditors feelings must remain in profession, because he felt an obligation or duty rightly made on benefit
provided by a professional organization ; (b) continuous professional commitments regarding to auditor
awareness should be in profession, because of costs or losses to be borne by auditors (eg financial loss) in
connection in losing of auditor's professional organization ; and (c) affective professional commitment regarding
to desire to want to be in a profession, because auditor was having an emotional bond or have the same values
with profession organization.
2.2 Conceptual Framework
Based on theory review above, it can be made the following conceptual framework.
Figure 1. Research conceptual Framework
2.3 Hypothesis Development
2.3.1 Effect of Auditor Competence (X1) on Audit Quality (Y1)
Watkins et al. (2004) proved that auditor competence to find and eliminating material misstatement and
manipulation in financial statements affect on audit quality. Furthermore, Lee and Stone (1995) also proved that
competence and independence affect on audit quality. Perry (1984) also proved that there are four factors that
affecting audit quality namely budget scope, incompetent, critically evaluate the transaction, and not
independent. Incompetent and independent is the dominant factor affecting audit quality. Therefore, this study
hypothesis is:
H1: auditor competence has a positive effect on audit quality
2.3.2 Effect of Auditor Independence (X2) on Audit Quality (Y1)
Mojtahedzadeh and Aghaei (2005) proved that auditor independence is a decisive factor in public
accounting profession. Without independence, audit detection task to find material misstatement is questionable,
because bias reports have low effect on audit quality. Furthermore, Wooten (2003) proved that auditor
independence is an important factor to affects audit quality. Hussey and Lan (2001) also proved that an audit can
only be qualified if auditor become independent to report violations of agreement between principal and agent.
Therefore, this study hypothesis is:
H2: Auditor's independence has a positive effect on audit quality

2.3.3 Audit Time Budget (X3) Moderate the Effect of Auditor Competence on Audit Quality (Y1)
Arnlod et al. (2000) proved that a strict time budget in auditing environmental will decline auditor
competence through narrowed scope; reduce certain audit procedures, reliance on evidence of lower quality, and
removal of some of audit procedures. Mann and Tan (1993) concluded that tight budget times often lead to high
stress for auditor which is characterized by a decline in thinking and assessment, the narrowing in election
perception, indecision, and incomplete and indiscriminate in seeking information which could reduce auditors
competence. Therefore, this study hypothesis is:
H3: Audit time budget strengthen effect of auditors competence on audit quality
2.3.4 Audit Time Budget (X3) Moderates Effect of Auditor Independence on Audit Quality (Y1)
Rigorous audit time budget arises from an imbalance between the task and time available that cause
stress to affects auditors professional ethics through attitude, intention, attention, and behavior of auditors
(DeZoort, 1998 and Braun, 2000). As a result, auditor independence decreases and it will increase risk that an
audit opinion is not right, so it can be detrimental to users of audited financial statements (McNair, 1991).
Meanwhile, Smith et al. (1997) proved that a tight time budget audits often lead to unintended negative effect on
independence that affecting audit quality. Therefore, this study hypothesis is:
H4: Budget time audit strengthen effect of auditor independence on audit quality
2.3.5 Professional Commitment (X4) Moderates Effect of Auditor Competence on Audit Quality (Y1)
Professional commitment is an important factor in an individual’s behavior within profession context.
Auditors with a high level of professional commitment tend more competent and independent in addressing
issues related to inter-role conflict and remain focused on job (Lui et al., 2001). While Yetmar (2005) proved
that high professional commitment is reflected in sensitivity to issues of professional ethics to raise competence
and independence of auditor. Therefore, this study hypothesis is:
H5: Professional commitment strengthen effect of auditor’s competence on audit quality
2.3.6 Audit Professional Commitment (X4) Moderates Effect of Auditor Independence on Audit Quality
(Y1)
Greenfield et al. (2007) proved that high professional commitment can become a factor to increase competence
and independence of auditor. Study results of Shaub et al. (1993) concluded that one important component of this
commitment is basis of professional standards and ethics are used as the basis for public accounting practice so can increase
auditor competence and independence in decision making. Therefore, this study hypothesis is:
H6: Audit professional commitment strengthens effect of auditor independence on audit quality
III. METHODS
3.1 Population and Sample
Population was a public accountant at accounting firm in Indonesia in 2012 which obtained a license from Minister
of Finance, not under leave condition, and other causes, with amount of 918 public accountants. Furthermore, samples are
selected randomly in reference to formula of Slovin Umar (2000:68) as many as 278 public accountants.
3.2 Data Types and Data Collection
This study uses primary data in form of a public accountant’s perception of auditor’s competence, auditor
independence, audit time budget, professional commitment, and audits quality. Data were collected through questionnaires.
Respondents is provided five qualitative alternative answers, then it be quantified by giving a score to each answer using a
Likert scale, from strongly agree (5) to strongly disagree (1) (Sekaran, 2006).
3.3 Data Analysis Techniques
Hypotheses 1 through 4 are tested by Partial Least Square (PLS) with following equation.
y1 = bo + b1x1 + b2x2 + b3x1*x3 + b4x2*x3 + b5x1*x4 + b6x2*x4 + e
where: y1 = audit quality
x1 = auditors competence
x2 = auditor independence
x3 = audit time budget
x4 = professional commitment
b1..... b6 = regression coefficient
e = other variables not included in model (confounding variables)
Response bias, validity, reliability, linearity, and goodness of fit models is tested before PLS analysis be done,

IV. RESULTS
4.1 Data Collection Results
Data collection results through questionnaire delivery are presented in Table 1 below.
Table 1. Details of Shipping and Returns Questionnaire
No Questionnaire Delivery Sent Return (%)
1 Stage 1 278 64 (23%)
2 Stage 2 (repetition for not response at stage 1) 214 58 (27%)
3 Stage 3 (repetition for not response at stage 2) 156 56 (36%)
T o t a l 648 178 (27%)
Sources: Primary data processed
Table 1 shows that total of 648 questionnaires were sent and received 178 or 27 percent response. Thus, the
amount of data to be analyzed as many as 178.
4.2 Testing Results of Response Bias, Validity, reliability, linearity, and Goodness of Fit Model
Response bias test results by using Kolmogorov -Smirnov Z indicates that value of asymmetry
significance or p value of each variable greater alpha 5 %. These results indicate that there is no response bias.
Validity result using Pearson correlation test showed that p-value is smaller 0:05. These results indicate that
items in questionnaire are valid. Meanwhile, the results of the reliability test using Cronbach alpha indicates that
Cronbach alpha values exceeding 0.6. These results indicate that items in questionnaire revealed reliable.
linearity assumption test results using Curve Fit linear model indicates that significant for the fourth hypothesis
is smaller than 0.05 for all possible models. This result indicates the model is linear. Goodness of Fit model test
results using R2
value is 0.6873 or 68.73 percent. It indicates that data can explain information 68.73 percent by
model. The remaining 31.27 percent is explained by other variables (outside of model) and error. These results
say that PLS model is well formed. Thus, the model can be used for hypothesis testing.
4.3 Hypothesis Testing Results and Discussion
Hypothesis testing results using PLS are presented in Table 2 and Figure 2 below.
Table 2. Coefficient estimates, t-stat, and p-value of hypothesis tests
Relation
Estimation
coefficient
t-stat p-value
Auditor competence (x1)  Audit quality (y1) 0.173 2.267 0.023
Auditor independence (x2)  Audit quality (y1) 0.246 3.184 0.001
Audit time budget (x3)  Audit quality (y1) 0.286 3.950 0.000
Professional commitment (x4)  Audit quality (y1) 0.185 2.187 0.029
x1*x3  Audit quality (y1) -0.211 2.820 0.005
x1*x4  Audit quality (y1) 0.219 3.168 0.002
x2*x3  Audit quality (y1) -0.209 3.021 0.003
x2*x4  Audit quality (y1) 0.214 3.421 0.001
Sources: Primary data processed in 2012

Figure 1. Diagram of Hypothesis Testing Results Using PLS
4.3.1 Effect of Auditor Competence (X1) on Audit Quality (Y1)
Hypothesis results in Table 2 above show that p-value of 0.023 is smaller and alpha 5 %, t-stat 2.267 is
greater1.96. Estimated value of coefficient 0.273 for inner weight is positive. This indicates a positive
relationship. It means the higher auditor's competence, the higher audit quality. Thus, first hypothesis which
states that auditor's competence has a positive effect on audit quality is accepted.
This study results are supported by research of Schroder et al. (1986) and Duff (2004) which proved
that attribute to determine audit quality is auditors competence. In addition, empirical data show that auditor’s
competence is formed by good audit planning, knowledge, experience, and supervision. This is indicated by
mean value of 4.0. Meanwhile, the PLS results showed that experience indicator show major effect on auditor
competence (first order) with outer weight 0.849, t-stat 3.128 > 1.96, 0.000 and p-value of <0.05. Therefore, the
experience is considered the most important indicators by respondents to form auditor's competence.
This argument is supported by Bouwman and Bradley (2004) that auditor experience is an important element in
inspection task. Experience can be gained from work. By doing the work, especially for repetitive tasks and
routines (such as auditing), auditor can get a chance to do a better job and can make better decisions as well. So,
will support competence. Furthermore, Tubbs (1992) states that subject with more audit experience will more
competent find more errors and mistakes items than auditor who has less experience. Furthermore, Simanjutak
(2005:88) stated that work experience can deepen and expand job competence. The more often a person doing
the same job, the more skilled and sooner he finished the job. The more work a person does, the more rich
experience and extensive work and enables to increase performance.
4.3.2 Effect of Auditor Independence (X1) on Audit Quality (Y1)
Hypothesis results in Table 2 above show that p-value of 0.001 is smaller than alpha of 0.05 and t-stat
3,184 is greater than 1.96. Estimated value of coefficient 0.346 for the inner weight is positive. This indicates a
positive relationship. It means the higher auditor independence, the higher audit quality. Therefore, second
hypothesis that auditor independence has a positive effect on audit quality is accepted.
This study results are supported by research Schroder et al. (1986), Deis and Giroux (1992), Warming
and Jensen (2001), Baotham and Ussahawanitchakit (2009), and Alexander et al. (2010) who state attributes that
determine audit quality with main focus on moral and ethical issues is auditor independence. In addition,

empirical data indicate that auditor independence is formed by audit market competition, economic dependence,
non-audit services, and future assignments, said to be good. This is indicated by mean value of 4.0. Meanwhile,
the PLS results indicate that non-audit services indicator is an dominant indicator of auditor independence (first
order) with outer weight -0984, t-stat 4.184 > 1.96, 0.000 and p-value of <0.05. Therefore, the non-audit
services are considered the most important indicators by respondents to form auditor independence.
This argument is supported by Shockley (1981) that accounting firm that providing management consulting
services to clients who are audited can increase the risk to damage independence than those who do not provide
such services. Ruddock et al. (2006) also proved that existence of non-audit services can lead to loss of auditor’s
independence. It is because revenue is tied to client through a large reception which is not related to auditing
Low independence makes value of audit services would be no benefit and its opinion will not give any
additional value (Sweeney, 1995 and Mautz and Sharaf, 1993). In addition, DeAngelo (1981b) states that
auditor's independence is the courage to tell " the truth although the truth is bad news " from the perspective of
client. Furthermore, Cox (2000) suggested that auditor independence is very important to maintain confidence in
integrity of financial reporting and capital markets. Therefore, auditor is required to maintain its independence,
intellectual honesty, and free from interest conflicts (Marden and Edwards, 2002).
Therefore, independence should be viewed as one of most important characteristics of auditors. It is
reason why so many people loss who hang their confidence in fairness of financial reporting by auditor's report
is because they hope to get impartial opinions. Auditing standards stated that auditors should independent,
meaning not easily affected because he was carrying out work for public interest. Public trust will decline if
there is evidence that independence of auditor's attitude turned out to be reduced. Therefore, to be independent,
auditor must be objective to expresses the fact.
4.3.3 Audit Time Budget (X3) Moderate Effect of Auditor Competence (X1) on Audit Quality (Y1)
Hypothesis results in Table 2 above show that p-value of 0.005 is smaller alpha of 0.05 and t-stat 2.820
is greater than 1.96. Estimated value of the coefficient inner weight -0311 is negative. It indicates that negative
relationship. It means the smaller audit time budget, the greater effect of auditor’s competence on audit quality.
Thus, third hypothesis which states that audit time budget strengthens effect of auditor’s competence on audit
quality is rejected.
This study results are supported by resilience theory of Grotberg (1995), which states that resilience is
ability to confront and overcome the pressures of work or the pressures of life, grouped into four levels, namely
succumbing, survival, recovery and thriving.
Based on resilience theory of Grotberg (1995), the this study results indicate that respondent's ability to
confront and overcome audit time budget pressure at thriving level indicated that individuals are not only able to
return to function before and when there is pressure, but resilient individuals would be able to confront and cope
with stressful and challenging conditions, by bringing new capabilities that make individuals better. Individuals
at level thriving has the following characteristics : a quiet demeanor, emotional control, ability, clear vision, a
positive self-concept, commitment/responsibility to profession, experience, knowledge, desire to positive social
relationships, and faith quality.
In order auditor able to face and overcome tight audit time budget, they should be fast forward
(thriving) in resilience theory Grotberg (1995), the characteristics which have sufficient experience and
knowledge. In connection with experience and knowledge, empirical data show that 46 percent of respondents
have experience more than 7 years and 47 percent have been audited as much as 4 times a year. Furthermore, 51
percent of respondent’s knowledge and skills that related to their professional knowledge are exceeding 24 SKP.
Trotman and Wright (1996) states that work experience can deepen and extend workability. The more often a
person doing the same job, the more skilled and sooner he finished the job. The more kinds of work a person
does, the more rich and extensive work experience that enables increased performance. Furthermore, Libby and
Frederick (1995) suggested that knowledge is information stored in memory that important for auditor, because
when the environment audit changes, auditor needs to improve knowledge of best practices to make judgments
This study results demonstrate that the smaller audit time budget, the greater effect of auditor’s competence on
audit quality. It is not necessarily that the smaller audit time budget, the greater effect of auditor’s competence
on audit quality. It is reminded by McNair (1991) that audit should be set with a time budget and a standard
audit fee. Generally, auditors tend to establish not standards n audit fee. Fees that not appropriate with auditing
standards will lead to shorter budget time and not measured accurately. PLS results indicate that time limit
indicator is an indicator that reflects the large audit time budget (first order) with outer loading 0.869, t-stat
3.316 > 1.96, 0.001 and p-value of <0.05. Therefore, the deadline is considered most important indicators by
respondents to reflect audit time budget.

This argument is supported by Eden (1982) that deadline is temporary time pressure which brings
effect on high intensity. Pressure time at this moment looks more dangerous than time budget pressure. It
deadline can makes auditors are required to complete a job immediately before the time/date specified. DeZoort
(1998) states that deadline can be derived from the firm, clients, and third parties such as regulators. Deadline
can appear suddenly (unexpectedly), so it create additional stress for auditor and unpredictable nature makes
auditor more difficult to manage.
4.3.4 Audit Time Budget (X3) Moderate Effect of Auditor Independence (X2) on Audit Quality (Y1)
Hypothesis results in Table 2 above show that p-value of 0.003 is smaller than alpha of 0.05 and t-stat
3,021 is greater than 1.96. Estimated value of coefficient inner weight -0309 is negative. It indicates negative
relationship (weaken). It means the smaller audit time budget, the greater effect of auditor independence on
audit quality. Thus, the fourth hypothesis which states that audit time budget strengthens effect of auditor
independence on audit quality is rejected.
This study results are supported by resilience theory of Grotberg (1995), namely one's ability to
confront and overcome work or life pressures are grouped into four levels, namely level of succumbing,
survival, recovery and thriving.
Based on resilience theory of Grotberg (1995), the this study results indicate that respondent's ability to
confront and overcome audit time budget pressure at thriving level indicated that individuals are not only able to
return to function before and when there is pressure, but resilient individuals would be able to confront and cope
with stressful and challenging conditions, by bringing new capabilities that make individuals better. Individuals
at level thriving has the following characteristics : a quiet demeanor, emotional control, ability, clear vision, a
positive self-concept, commitment/responsibility to profession, experience, knowledge, desire to positive social
relationships, and faith quality.
In relation with commitment to profession, Jeffrey et al. (1995) proved that accountants with high
professional commitment considers important to adherence to standards and ethics to the improvement of moral
development and ethics encourage sustainable development to increase their independence. So, in order that
auditor able to face and overcome tight time budget audit, they must at advanced level rapidly (thriving) in
resilience theory Grotberg (1995), the characteristics which have a high commitment to profession.
In addition, Waggoner and Cashell (1991) warned that to loose audit time budget can make auditors are
not motivated to work harder. Adversely, too tight audit time budget can lead to counter-productive behavior. It
is caused by presence of neglected tasks. The same thing also expressed by Kelly and Margheim (1990) that
tight time budget can affect the auditor’s behavior, which failed to examine the principles of accounting,
document review superficially, the client receives a weak explanation, and reduce work quality on one step
below level of audit accepted. Therefore, according to Braun (2000) it would impair auditor independence
through a reduction in level of detection and investigation.
Sososutikno (2003) states that a tight audit time budget makes auditor is required to show the
efficiency of the budget period prepared. For accounting firm, rigorous audit time budget is a condition that can
not be avoided in face of competition climate. Accounting company should be able to make a proper audit time
budget. Too long audit time budget create greater audit costs, so client will bear greater cost of audit. This could
be counterproductive if clients choose more competitive accounting firm. Therefore, audit time budget should
be realistic, not too long or too fast.
Audit time budget is necessary for auditors to perform their duties in order to meet client demand in a
timely manner and be one key to success in future auditors careers. Therefore, criteria to get a good ranking are
the achievement of budget time (Kelley and Seiler, 1982). In addition, audit time budget used as a tool for
planning and control are best way for firm make focused and comprehensive audit (Cook and Kelley, 1991).
4.3.5 Professional Commitment (X4) Moderate Effect of Auditor Competence (X2) on Audit Quality (Y1)
Hypothesis results in Table 2 above show that p-value 0.002 is smaller than alpha 0.05 and t-stat 3.168
is greater than 1.96. Estimated coefficient value of inner weight 0.219 is positive. It indicates positive
relationship (strengthening). It means, the stronger professional commitment, the greater effect of auditor’s
competence on audit quality. Thus, the fifth hypothesis which states that commitment strengthens effect of
professional auditor’s competence on audit quality is accepted.
This study results are supported by research of Jeffrey and Weatherholt (1996) that auditors with high
professional commitment behavior is more directed to obey rules than auditors with low professional
commitment, thus increasing competence and independence. Gunz and Gunz (1994) proved that to become a
true professional, one must have a high professional commitment to invest a lot of time and energy in learning
and practicing the knowledge and professional skills. Therefore, knowledge and skills are professionalism
foundation that can improve their professional competence.

Professional commitment to research is reflected by normative, continuous and affective professional
commitment. Normative professional commitment demonstrates indicators that reflect the major (first order) of
professional commitments. This indicates that normative professional commitments are considered most
important by respondents.
4.3.6 Professional Commitment (X4) Moderation Effect of Auditor Independence (X2) on Audit Quality
(Y1)
Hypothesis results in Table 2 above show that p-value 0.0012 is smaller alpha 0.05 and t-stat 3,421 is
greater than 1.96. Estimated coefficient value of inner weight of 0.219 is positive. It indicates positive
relationship (strengthening). It means the stronger professional commitment, the greater auditor independence
effect on audit quality. Thus, sixth hypothesis which states that professional commitment strengthens effect of
auditor independence on audit quality is accepted.
This study results are supported by research of Jeffrey et al. (1995) who concluded that accountants
with high professional commitment very concern to adherence and ethics that affecting to improve moral
development and supporting sustainable ethics development, thereby increasing independency. Lampe and Finn
(1991) in his study concluded that auditor ethics development reflects ethical and standards compliance. Auditor
ethics development level is a function of their orientation to meet standards and ethics related to professional
commitment to improve auditor independence.
V. CONCLUSIONS, IMPLICATIONS, LIMITATIONS AND SUGGESTIONS
5.1 Conclusion
First, auditor’s competence has positive effect on audit quality. It means the higher auditor's
competence, the higher audit quality. Second, auditor independence has a positive effect on audit quality. It
means the higher auditor independence, the higher audit quality. Third, audit time budget weaken effect of
auditors competence on audit quality. It means the smaller audit time budget, the greater effect of auditor’s
competence on audit quality. Fourth, audit time budget weaken effect of auditor independence on audit quality.
It means the smaller audit time budget, the greater effect of auditor independence on audit quality. Fifth,
professional commitment strengthens effect of auditor’s competence on audit quality. It means the stronger
professional commitment, the greater effect of auditor’s competence on audit quality. Sixth, professional
commitment strengthens effect of auditor independence on audit quality. It means the stronger professional
commitment, the greater effect of auditor independence on audit quality.
5.2 Implications
First implications are for auditor independence. Public accountant, in an effort to improve their
competence, should consider auditors competence creation, including planning, knowledge, experience, and
supervision. Auditor experience should be gained attention in effort to drive auditor’s competence. Therefore,
empirical data show that auditors experience is dominant to improve auditor competence greater than other
indicators.
Second implications are for auditor independence. Public accountant, in an effort to increase its
independence, should pay attention to indicators of auditor’s independence, namely audit market competition,
economic dependence, non-audit services, and future auditor assignments. Non-audit services should more
concern to improve auditor independence. Empirical data show that non-audit services shows greater effect than
other indicators on auditor independence.
Third implications are for audit time budget. Auditing should set standard time budget and audit fees as
well. Inappropriate auditing standards fee will lead to shorter budget time and not measured accurately. While
longer audit time budget can make auditors are not motivated to work harder.
Fourth implications are for professional commitments. Auditors, in an effort to improve his
professional commitments, should pay attention to indicators that reflect professional commitment, namely
normative, continuous and affective professional commitment. Normative professional commitment is the
biggest indicator to reflect professional commitment than other indicators.
5.3 Limitations and Suggestions
Researchers did not differentiate between large (big four) and small (non big four) accounting firm as
population and study sample. Therefore, reader should be cautious in generalizing this study results. Further
research should consider typology of accounting firm, ie large (big four) and a small (non big four) auditing firm
as population and study sample. Kelley and Seiler (1982) warned that typology distinction is important, because
it will affect on level of audit time budget pressures and perceived behavior of auditors in audit. Auditor at a
certain level has interest to receive an evaluation of their performance and one of the important factors for good
performance evaluation is achievement of audit time budget.

REFERENCES
[1]. Aranya, N. and K. R. Ferris. 1984. A Reexaminatio of Accountants Organizational Profesional Conflict.The Accounting
Review.Vol.59:1-15
[2]. Arnlod, V., S. G. Sutton, S. C. Hayne, and C. A. P Smith. 2000. Group Decision Making: The Impact of Opportunity Cost Time
Pressure and Group Support Systems. Behavioral Research in Accounting. Vol. 12: 69-97
[3]. Ashbaugh, H. 2004. Ethical Issues Related to the Provision of Audit and Non-audit Services: Evidence from Academic Research.
Journal of Business Ethics. (June): 143-148.
[4]. Beattie, V., R. Brandt, and S. Fearnley. 1999. Perceptions of Auditor Independence: UK Evidence. Journal of International
Accounting, Auditing & Taxation. Vol. 8. Number 1: 67-107.
[5]. Behn, B. K., J. V. Carcello, D. R. Hermanson, and R. G. Hermanson. 1997. The Determinants of Audit Client Satisfaction
Among Clients of Big 6 Firms. Accounting Horizons. Sarasota Vol. 11. Iss. 1: 7-25
[6]. Boatham, S. and P. Ussahawanitchakit. 2009. Audit Independence, Quality, and Credibility: Effects on Reputation and
Sustainable Success of CPAs in Thailand. International Journal of Business Research. Volume 9. Number 1: 1-26
[7]. Braun, R. L. 2000. The Effect of Time Pressure on Auditor Attention to Qualitative Aspects of Misstatement Indicative of
Potential Fraudulent Financial Reporting. Accounting, Organization & Society. 25: 89-101
[8]. Carcello, J., R. Hermanson, and N. McGrath. 1992. Audit Quality Attributes: The Perceptions of Audit Partners, Preparers, and
Financial Statement Users. Auditing: A Journal of Practice & Theory, Vol 11, Iss 1: 1-15.
[9]. Cook, E., and T. Kelley. 1991. Auditor Stress and Time-Budgets. The CPA Journal, (Jul.), Vol. 68, Iss. 7: 83-88
[10]. Colbert, J. L. 1989. The Effect of Experience Auditor's Judgements. Journal of Accounting Literature. 8: 137-149.
[11]. Cox, R. 2000. Auditor Independence becomes Hot International Topic. Chartered Accountants Journal of New Zealand, 79 (8):
7–10.
[12]. DeAngelo, L. E. 1981. Auditor Size and Auditor Quality. Journal of Accounting & Economics. (Dec.) 3: 183-199.
[13]. 1981b. Auditor Independence, "Low Balling" and Disclosure Regulation. Journal of Accounting & Economics, (August.): 113-
127.
[14]. Deis, D. R. and G. A. Giroux. 1992. Determinants of Audit Quality in the Public Sector. The Accounting Review. Vol. 67.
Number 3: 462-479.
[15]. DeZoort, F. T. 1998. Time Pressure Research in Auditing Implication for Practice. The Auditor’s Report. 22. No. 1 (Fall): 1-5
[16]. Dikolli, S. S., S. A. McCracken, and J. B. Walawski. 2004. Audit-Planning Judgments and Client-Employee Compensation
Contracts. Behavioral Research in Accounting. Sarasota Vol. 16: 45-62
[17]. Duff, A. 2004. Auditqual: Dimensions of Audit Quality. Published by: The Institute of Chartered Accountants of Sacotland.
http://www.ssrn.com
[18]. Dye, R. A. 1991. Informationally Motivated Auditor Replacement. Journal of Accounting & Economics. Vol. 14. Iss. 4: 347-374.
[19]. Eden, D. 1982. Critical Job Events, Acute Stress, and Strain: a Multiple Interrupted Time Series. Organizational Behavior and
Human Performance. 30: 312-329.
[20]. Grothberg, E. 1995. A Giude to Promoting Resilience In Chlidren Strengthening the Human Spirit. The Series Early Childhood
Development: Practise and Reflections. Number 8. The Hague: Benard van Leer Foundation.
[21]. Greenfield, A. C., C. S. Norman, and B. Wier. 2007. The Effect of Ethical Orientation and Professional Commitment on
Earnings Management Behavior. Journal of Business Ethics. Vol. 75: 175-198.
[22]. Gumanti, T. A. 2003. Motivasi Dibalik Earning Management. http//:korantempo.com
[23]. Gunz H. P. and Gunz S. P. 1994. Professional Organizational Commitment and Job Satisfaction For Employed Lawyers.
Humman Relatation Journal. 47. (7): 801–827.
[24]. Hall, M., D. Smith, and K. L. Smith. 2005. Accountant’s Commitment to Their Profession: Multiple Dimensions of Professional
Commitment and Opportunities for Future Research. Behavioral Research Accounting. Vol 17: 89-109
[25]. Hussey, R. and G. Lan. 2001. An Examination of Auditor Independence Issues from the Perspectives of U.K. Finance Directors.
Journal of Business Ethics, (Springer). Vol. 32. No. 2: 169-178.
[26]. Iskandar, T. M., M. M. Rahmat, and H. Ismail. 2010. The Relationship Between Audit Client Satisfaction and Audit Quality
Attributes: Case of Malaysian Listed Companies. International Journal of Economics and Management. 4 (1): 155 – 180
[27]. Jaffar, N., S. M. Ali, Z. B. Selamat, and N. Alias. 2005. The Perception of the Audit Partners, Audit Committee and Investment
Analyst on the Audit Quality Attributes in Malaysian. Finance India. (June). Vol. 19. Iss. 2: 535-546
[28]. Jeffrey, C. and N. Weatherholt. 1996. Ethical Development, Professional Commitment and Rule Observance Attitudes: A Study
of CPAs and Corporate Accountants. Behavioral Research in Accounting. 8: 8–31.
[29]. N. Weatherholt, and S. Lo. 1995. Ethical Development, Professional Commitment, and Rule Observance Attitudes: A Study Of
Auditors In Taiwan. http//:www.ssrn.com
[30]. Kelley, T. and R. E. Seiler.1982. Auditor Stress and Time Budgets. The CPA Journal. Dec. 52: 24-34
[31]. Kelley, T. and L. Margheim. 1990. The Relationships Between Senior Auditor Budget Participation, Job Structuring, Job
Consideration And Staff Auditor Time Budget Pressure. The Journal of Applied Business Research. Vol. 18 (2): 105-113
[32]. King. L. A. 2007. The Science of Psychology: an apprective view. Ed12
. McGraw-Hill 1221 Avenue of the Americas, NY 10020
[33]. Lasmahadi, A. 2002. Sistem Manajemen SDM Berbasis Kompetensi. http//:www.e-psikologi.com
[34]. Lee, T. A. and M. Stone. 1995. Competence and Independence: the Uncongenial Twins of Auditing?. Journal of Business
Finance & Accounting: 1169-1177.
[35]. Libby, R. and D. Frederick. 1990. Experience and the Ability to Explain Audit Findings. Journal of Accounting Research. Vol.
22: 348-367.
[36]. Lui, S., J. Ngo, and A. Tsang. 2001. Inter-Role Conflict as a Predictor of Job Satisfaction and Propensity to Leave: A Study of
Professional Accountants. Journal of Managerial Psychology. 16 (5/6): 469–484.
[37]. MacMillan, K., K. Money, S. Downing, and C. Hillenbrand. 2004. Giving your Organisation SPIRIT: An Overview and Call to
Action for Directors on Issues of Corporate Governance, Coporate Reputation and Corporate Responsibility. Journal of General
Management. Vol. 30: 15-42.
[38]. Malone, C. F. and R. W. Roberts. 1996. Factors Associated with the Incidence of Reduced Audit Quality Behaviors. Auditing:
A Journal of Practice & Theory. 14: 39-46.
[39]. Mann, L. and C. Tan. 1993. The Hassled Decision Maker: The Effects of Perceived Time Pressure on Information Processing in
Decision Making. Australian Journal of Management. 18 (2): 197-210.
[40]. Marden, R., and R. Edwards. 2002. Issues of Auditor Independence Revisited. Internal Auditing Journal, 17 (2): 36-42.
[41]. Mautz, R. K., and H. A. Sharaf. 1993. The Philosophy of Auditing. American Accounting Association. Working Paper.
http://www.ssrn.com

[42]. Mayhew, B. W. and M. S. Wilkins. 2003. Audit Firm Industry Specialization as a Differentiation Strategy: Evidence from Fees
Charged to Firms Going Public. Auditing: A Journal of Practice and Theory. (Sept.), Vol. 22. Iss. 2: 33-50
[43]. McNair, C. J. 1991. Proper Compromises: The Management Control Dilemma in Public Accounting and its Impact on Auditor
Behaviour. Accounting, Organizations & Society. 16 (7): 635-653
[44]. Mojtahedzadeh, V. and P. Aghaei. 2005. Factors Affecting on Independent Audit Quality: From the ViewPoint of Auditors and
Users. The Iranian Accounting and Auditing Review. Vol.11. Number. 38: 53-76.
[45]. Moizer, P. 1998. Company Directors' Views on The Performance of The 1987 Big Eight And The 1996 Big Six., Leeds University
Business School.WorkingPaper.http://www.ssrn.com
[46]. Perry, L. 1984. The SEC's Enforcement Activities. The CPA Journal. Vol. 54. Number 4: 9-13.
[47]. Ruddock, D., S. J. Taylor, and S. L. Taylor. 2006. Non-Audit Services and Earnings Conservatism: Is the Auditor Independence
Impaired?. Contemporary Accounting Research, 23 (3): 701- 746.
[48]. Sekaran, U. 2006. Metodologi Penelitian untuk Bisnis. Salemba Empat. Jakarta
[49]. Shockley, R. and R. Holt. 1981. Perceptions of Auditors Independen: An Empirical Analysis. The Accounting Review. (Oct.):
785-800
[50]. Schroeder, M. S., I. Salomon, and D. W. Vikrey. 1986. Audit Quality: The Perception of Audit Committee Chairperson and
Audit Partners. Auditing: A Journal of Practise & Theory, Spring: 77-92
[51]. Shaub, M. K., D. W. Find, and P. Munter. 1993. Effects of Auditor’s Ethical on Commitment and Ethical Sensitivity. Behavioral
Research Accounting. Vol. 5: 145-169
[52]. Smith, C., V. Arnold, and S. Sutton. 1997. The Impact of Time Pressure on Decision-Making for Choice and Judgement Tasks.
Accounting & Business Review. (July): 365-383.
[53]. Soeratin, H. Z. 2010. Kantor Akuntan Publik Dibekukan. http//:www.depkeu.go.id.
[54]. Sososutikno, C. 2003. Hubungan Tekanan Anggaran Waktu dengan Perilaku Disfungsional Serta Pengaruhnya Terhadap
Kualitas Audit. Simposium Akuntansi VI, Oktober: 1116-1124.
[55]. Sridharan, U. V., W. R. Caines, J. McMillan, and S. Summers. 2002. Financial Statement Transparency and Auditor
Responsibility: Enron and Andersen. International Journal of Auditing. Vol. 6: 277-286.
[56]. Sutton, S. G. 1993. Toward an Understanding of the Factors Affecting the Quality of the Audit Process. Decision Science. Vol.
24. Iss. 1: 88-105
[57]. Sweeney, J. T. 1995. The Moral Expertise of Auditors: An Exploratory Analysis. Research on Accounting Ethics, Vol. 2: 213-
234.
[58]. Tan, H. and R. Libby. 1997. Tacit Managerial Versus Technical Knowledge as Determinants of Audit Expertise in the Field.
Journal of Accounting Research. Vol. 35: 97-113.
[59]. Trotman, K. T. and A. Wright. 1996. Recency Effects Task Complexity, Decision Mode, and Task Specific Experience.
Behavioral Research in Accounting. Vol. 8: 134-175
[60]. Umar, H. 2000. Riset Pemasaran dan Perilaku Konsumen. PT.Gramedia Pustaka Utama. Jakarta
[61]. Waggoner, J. B. and J. D. Cashell. 1991. The Impact of Time Pressure on Auditors’ Performance. The CPA Journal. (Jan-Apr.):
27-32.
[62]. Warming, R. B. and L. Jensen. 2001. Quality Dimensions In External Audit Services An External User Perspective. European Accounting
Review, Vol. 7 (1): 1-15.
[63]. Watkins, A. J., W. Hillison, and S. E. Morecroft. 2004. Audit Quality: A Synthetis Theory and Empirical Evidence. Journal of
Accounting Literature. Vol. 23: 153-194.
[64]. Wooten, T. C. 2003. Research about Audit Quality. The CPA Journal. (Jan.). Vol. 71. Iss. 1: 48-52
[65]. Wulandari, E. R. 2010. Strengthening the Integrity of Indonesian Capital Market. Makalah Seminar. Hotel Borobudur. Jakarta. 8
April.
[66]. Yetmar, S. A. 2005. Tax Practitioners' Ethical Sensitivity: A Model and Emprical Examination. Journal of Business Finance &
Accounting. Vol. 32: 1171-1196.

I0361064074

More Related Content

Similar to I0361064074

Recently uploaded

I0361064074